In the U.S., the rise of weight loss drugs and non-alcoholic beverage options is causing consumers to reconsider their soft drink purchases. Despite this trend, Coca-Cola reported strong earnings for the second quarter on Tuesday, driven by solid global demand for its beverages, which allowed the company to raise its full-year expectations.
James Quincey, CEO of Coca-Cola, expressed optimism about the company’s financial results, highlighting strong growth in both revenue and operating income in a dynamic market environment. However, Coca-Cola experienced a 1% decline in volume sales in North America during the quarter. Quincey attributed this dip to a decrease in “away-from-home channels,” which encompasses bottled water, sports drinks, coffee, tea, and soda.
This volume decline was somewhat mitigated by the strong sales of Fairlife milk and Coca-Cola soda, which ranked first and second, respectively, in retail sales growth for the quarter. To counter the volume drop, Quincey mentioned that Coca-Cola is collaborating with fast-food chains to incorporate their beverages into combo meals. The company is particularly focused on enhancing its partnership with McDonald’s to improve sales related to its $5 meal deal, which includes a soft drink.
Overall, Coca-Cola outperformed Wall Street predictions, reporting revenues of $12.4 billion, or approximately $0.84 per share, surpassing analyst expectations of $11.76 billion and about $0.81 per share, according to FactSet.
The company has increased its forecast for organic revenue growth to between 9% and 10%, an upgrade from its previous estimate of 8% to 9%.
Similarly, Pepsi is facing challenges in engaging U.S. consumers, who are increasingly opting for health-conscious products, including those aimed at weight loss. A Gallup poll indicates a significant reduction in alcohol consumption among young adults in the U.S. Earlier in July, Pepsi attributed its lackluster second-quarter performance to multiple product recalls.